Exchange rate uncertainty and the timing of Chinese outward direct investment
Abstract
This paper investigates the timing of Chinese ODI under exchange rate uncertainty by employing the Cox proportional hazards model. Using matched data this paper finds both exchange rate level and volatility are the important determinants, and RMB depreciation and greater volatility will deter ODI. Such adverse effect is found more striking for non-SOEs, firms in the eastern region, and non-exporting firms. With China's recent exchange rate formation mechanism reform, the impact of exchange rate uncertainty is expected to be stronger. These findings have important implications for China's exchange rate regime reform and its “Going Global” strategy.
RAS ID
30605
Document Type
Journal Article
Date of Publication
2021
Volume
76
Funding Information
Major Program of China’s National Social Science Sumitomo Foundation
School
School of Business and Law
Copyright
subscription content
Publisher
Elsevier
Comments
Qi, J., Liu, H., & Zhang, Z. (2021). Exchange rate uncertainty and the timing of Chinese outward direct investment. International Review of Economics & Finance, 76, 1193-1204. https://doi.org/10.1016/j.iref.2019.11.008